Labour plans to challenge Lib Dem MPs with bedroom tax vote

The party's announcement that it will hold a Commons vote next Tuesday on scrapping the measure is a test of those in Clegg's party who have condemned it.

After flooding what he once called the "blank page" with policies, Ed Miliband is setting a series of parliamentary tests for Labour's opponents. Tomorrow, the party will use an opposition day debate to stage a vote on its proposed energy price freeze. Miliband will say in his speech today on living standards: "It is workable, it will happen if Labour wins the next election. And tomorrow Conservative and Liberal Democrat MPs could vote for it. If they line up against it, the British people will know the truth: this government is on the side of the big energy companies not hard-pressed families." It's one thing for the coalition parties not to support an energy price freeze, but it's another for them to actively vote against it. 

Then on Tuesday, Labour will hold a similar vote on its pledge to scrap the bedroom tax. For Lib Dem MPs, this represents a particular challenge. As evidence has grown of the harm inflicted by the policy, Clegg's party has become increasingly uncomfortable with the government's stance. At its recent conference, the party voted in favour of a motion calling for "an immediate evaluation of the impact of the policy" and for "a redrafting of clear housing needs guidelines in association with those representing vulnerable groups including the disabled, elderly and children."

Until new guidelines are in place, it argued that there should be no withdrawal of housing benefit from those on the waiting list for social housing and that there should be an exemption for those who "temporarily have a smaller housing need due to a change in their circumstances, but whose need will predictably return to a higher level (e.g. whose children will pass the age limits for separate rooms within that period)".

But some senior figures went further, with Shirley Williams describing it as "a big mistake" and Charles Kennedy commenting: "I didn’t support it in the Commons and I’m not going to support it here. Mine is the largest geographic constituency in the whole of the UK – but it’s not untypical from any rural area, or for that matter urban area. In a rural area, you don’t have the flexibility, you don’t have the spare capacity in housing to move people vast distances." Another MP, Andrew George, has said: "It is one of the absurdities of the system that it is supposed to save money but it is likely to land the taxpayer with a bigger bill. It will inevitably force rural tenants out of villages where they have lived for years, taking them away from their extended families, schools and support networks. It will take key workers away from areas where they perform vital roles."

Clegg's recent emphasis on the "independent research" the government had commissioned on the policy was an attempt to buy some breathing space. He told the Commons: "Of course, I accept that there will be cases where for some households this change from one system to another creates real dilemmas which need to be addressed through the money we are making available to local authorities.

"To be honest, I have seen lots of widely different figures being cited about the impact of this policy - that is why we are commissioning independent research to exactly understand the impact of this."

While Clegg's words left the impression that he had announced a new review, the study was in fact announced in March by Iain Duncan Smith, who said then: "Going forward I will continue to closely monitor and adjust the implementation of the policy, including an independent evaluation by Ipsos MORI, the Cambridge centre for housing and planning research and the Institute For Fiscal Studies to ensure that the needs of these groups are effectively addressed in the longer term."

As luck would have it, the DWP will this week publish research on "public perceptions of the removal of the spare room subsidy". Should that study confirm public hostility to the measure, a significant number of Lib Dem backbenchers will feel encouraged to join Labour in the division lobby on Tuesday. 

Campaigners protest against the bedroom tax in Trafalgar Square before marching to Downing Street on 30 March 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR